Asset Managers’ Commitment to Net Zero Uncertain
Review of Pension Climate Commitments
Asset Managers’ commitment to Net Zero is uncertain.
While the big U.S. asset managers voting records in support of ESG issues have historically lagged European and smaller managers, the exodus of State Street, JPMorgan, PIMCO, and BlackRock’s U.S. operations from Climate Action 100+ (CA100+) could undermine your pensions’ climate risk mitigation policies. Given these and other recent market developments, Climate Finance Action believes ensuring investment managers’ compliance with your climate risk strategy is critical.
Climate Finance Action offers practical guidance and resources for pension funds to pursue impactful, practical solutions to manage climate risk. The questions below provide a template for state fiduciary review of investment manager alignment with the state’s climate risk mitigation plan and Paris Accord commitments.
Background
Climate risk mitigation is under attack. Although asset management firms have received civil investigative demands from conservative state attorneys general offices inquiring about integrating climate risk as financial risk, investigations have not turned into actual litigation and seem to have little standing. Creating fear and intimidation is not a reason for asset managers and investors to withdraw from collaborative climate initiatives and abandon integrating climate risks into risk assessment models.
Regardless, political messaging and even policy changes in other states do not change your state’s fiduciary duty and investment policies. This means conversations with investment managers, especially before shareholder season, are critical to achieving risk mitigation strategies.
Questions to ask asset managers who recently exited CA 100+
Your [asset manager, i.e., State Street] participation in CA100+ created a sense of certainty that you were committed to managing the material risks of climate risk to our investments. Now that you are not in CA100+, how will you comply with our fund’s climate risk investment policies?
We need to understand your plans in more detail. What objective standards will you use to decide whether or not to support shareholder proposals about climate risk?
Have your decarbonization plans changed? What documentation that any changes you have made still conforms with our climate risk strategy?
Moving forward, what actions will [asset manager] take to assess and mitigate the systemic risk of climate and identify opportunities for our fund?
ABOUT CLIMATE FINANCE ACTION
Climate Finance Action (CFA) is a women-led, 501(C)3 non-profit organization equipping stakeholders and decision-makers to leverage the transformative power of publicly-held capital for real-world climate solutions to ensure a just transition to an inclusive economy in favor of people and the planet. With a focus on collaboration, education, and strategic partnerships, CFA has facilitated groundbreaking dialogues, developed comprehensive educational materials, and engaged with numerous stakeholders— educating 8,000+ union leaders and members and advising over 40 state treasurers and pension staff working towards policy reform. Contact us to learn more about our mission and how you can participate in this transformative journey.